Correlation Between RLJ Lodging and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both RLJ Lodging and Algonquin Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining RLJ Lodging and Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLJ Lodging Trust and Algonquin Power Utilities, you can compare the effects of market volatilities on RLJ Lodging and Algonquin Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in RLJ Lodging with a short position of Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLJ Lodging and Algonquin Power.
Diversification Opportunities for RLJ Lodging and Algonquin Power
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RLJ and Algonquin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding RLJ Lodging Trust and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities and RLJ Lodging is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on RLJ Lodging Trust are associated (or correlated) with Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of RLJ Lodging i.e., RLJ Lodging and Algonquin Power go up and down completely randomly.
Pair Corralation between RLJ Lodging and Algonquin Power
If you would invest 1,934 in Algonquin Power Utilities on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Algonquin Power Utilities or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
RLJ Lodging Trust vs. Algonquin Power Utilities
Performance |
| Timeline |
| RLJ Lodging Trust |
| Algonquin Power Utilities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
RLJ Lodging and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLJ Lodging and Algonquin Power
The main advantage of trading using opposite RLJ Lodging and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLJ Lodging position performs unexpectedly, Algonquin Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Algonquin Power will offset losses from the drop in Algonquin Power's long position.| RLJ Lodging vs. Diamondrock Hospitality | RLJ Lodging vs. Summit Hotel Properties | RLJ Lodging vs. Pebblebrook Hotel Trust | RLJ Lodging vs. Sunstone Hotel Investors |
| Algonquin Power vs. SiriusPoint | Algonquin Power vs. Brightspire Capital | Algonquin Power vs. RLJ Lodging Trust | Algonquin Power vs. Harrow Health 8625 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the CEOs Directory module to screen CEOs from public companies around the world.
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